Fuel prices are climbing as the conflict in the Middle East enters its second week, raising concerns across global energy and transportation sectors. As a major producer and exporter of crude oil and refined fuels, the Middle East is a critical node. The conflict escalation has forced the shutdown of multiple oil and gas facilities.
According to Xeneta, the Strait of Hormuz facilitates roughly 20% of global oil shipments and 30% of seaborne oil trade. Any disruption to this corridor has immediate global consequences.
For airlines, jet fuel remains one of the largest operational cost components. Xeneta reports that rising crude prices will inevitably push operating costs higher. As a result, carriers are expected to adjust fuel surcharges upward to offset increased expenses.
Unlike gasoline or diesel, jet fuel is not usually traded on the spot market, according to a report by Fox News, which brings with it price volatility, especially when supply tightens. The risk is heightened now since a significant share of the world’s jet fuel output is produced in the Middle East. According to a report by Air Cargo News, approximately 20% of global jet fuel passes through the Strait of Hormuz.
The shutdown of the Strait of Hormuz has similarly created operational challenges for ocean carriers servicing the Middle East and Eastern Mediterranean. Major carriers are implementing various risk‑mitigation measures, including service suspensions, vessel diversions, cancelled sailings, and suspending bookings.
Source: Xeneta, Fox news, Air Cargo News
Backlogs continue across markets traditionally routed through Abu Dhabi, Dubai, and Doha, with some airlines now booking several weeks in advance. Many airlines do not accept bookings at contract rate levels and require the selection of Priority or Express rates.
Airspace restrictions across Iraq, Syria, Bahrain, Kuwait, and Israel; along with partial limitations in Qatar, Jordan, and Saudi Arabia, continue to affect routings. Rising oil prices are beginning to spill over into airfreight rate structures. Several major carriers including Lufthansa and Air India have introduced additional cost measures. We expect additional war-risk related surcharges to follow from other carriers.
